Tribunal rules in favor of appellant for refund of unutilized CENVAT credit

The Tribunal, following the binding precedent established by the Supreme Court in Slovak India Trading Co. Pvt. Ltd., ruled in favor of the appellant for the refund of unutilized CENVAT credit upon the closure of their factory. The Tribunal emphasized the applicability of binding judicial precedent and stare decisis, directing the respondent department to pay the refund amount with interest within three months. Additionally, the Tribunal found that the refund claim was not barred by limitation due to the unique circumstances of the factory's closure and the absence of a specific time limit in the CENVAT Credit Rules.

---

---

Issues Involved:
1. Refund of unutilised CENVAT credit on closure of factory.
2. Applicability of binding judicial precedent and stare decisis.
3. Limitation for filing refund claims.

Issue 1: Refund of Unutilised CENVAT Credit on Closure of Factory
The appellant sought a refund of accumulated CENVAT credit upon the closure of their factory in 2017. The Assistant Commissioner initially rejected the claim, and the Commissioner (Appeals) upheld this decision, citing the lack of express provisions for such refunds in the CENVAT Credit Rules and divergent judicial decisions. The appellant relied on precedents like Slovak India Trading Co. Pvt. Ltd., arguing that there was no express prohibition against such refunds. The Tribunal, referencing the binding precedent set by the Hon'ble Supreme Court in Slovak India Trading Co. Pvt. Ltd., ruled in favor of the appellant, allowing the refund with interest.

Issue 2: Applicability of Binding Judicial Precedent and Stare Decisis
The Tribunal discussed the principle of binding precedent, emphasizing that decisions of the Hon'ble Supreme Court must be followed by all lower courts and tribunals. The Tribunal highlighted the judgment in Slovak India Trading Co. Pvt. Ltd., where the Supreme Court dismissed the SLP, thereby setting a binding precedent. The Tribunal also referenced the doctrine of merger and Article 141 of the Constitution, which mandates that the law declared by the Supreme Court is binding on all courts within India.

Issue 3: Limitation for Filing Refund Claims
The Tribunal addressed the issue of whether the refund claim was barred by limitation. It was noted that the appellant continued to file statutory returns until the closure of the factory and filed the refund claim immediately after surrendering the registration certificate. The Tribunal concluded that the claim was not barred by limitation, considering the unique circumstances of the factory's closure and the absence of a specific time limit in Rule 5 of the CENVAT Credit Rules for such refunds.

Conclusion:
The Tribunal, by majority opinion, set aside the impugned order and allowed the appeal with consequential relief, directing the respondent department to pay the refund amount with applicable interest within three months.

---